Do market shares exhaust?

Question

Does it happen in the market (if yes, how often) that all the shares of a company have been held up so that there are no more shares to be purchased.

I admit I am new at this and trying to wrap my head around the whole trade thing. I will however try to explain my query.

Let us say a company ABC which went public and declared say a total of 100 shares at IPO. What I believe going ahead only these 100 shares are available for trading at exchanges (unless the company intervenes again and split the share or introduce more, whatever...).

Now my question is, say the company ABC is a great company and everyone wants to keep its share. Lets say 100 persons, (100 different, unknown person; not counting groups or firms here who intent to buy the company by occupying all shares) manage to get 1 share each. Since the company is good none of these 100 investors are willing to release their share. This means all the shares for ABC are held up.

What if I ( as 101th investor) also want to get share of ABC company. What I believe is now I have to wait for at least any one of those 100 to release his/her share. Is it correct or there exists any other way.

If its correct, how often does it happen ?

Answer 1

As @ApplePie pointed out in their answer, at any given time there is a finite amount of stock available in a company.

One subtlety you may be missing is that there is always a price associated with an offer to buy shares. That is, you don't put in an order simply to buy 1 share of ABC, you put in an order to buy 1 share of ABC for $10. If no one is willing to sell a share of ABC for $10, then your order will go unfilled. This happens millions of times a day as traders try to figure the cheapest price they can get for a stock.

Practically speaking, there is always a price at which people are willing to sell their shares. You can put in a market order for 1 share of ABC, which says essentially "I want one share of ABC, and I will pay whatever the market deems to be the price". Your broker will find you 1 share, but you may be very unhappy about the price you have to pay!

While it's very rare for a market to have nobody willing to sell at any price, it occasionally happens that no one is willing to buy at any price. This causes a market crash, as in the 2007-2008 financial crisis, when suddenly everyone became very suspicious of how much debt the major banks actually held, and for a few days, very few traders were willing to buy bank stocks at any price.

Answer 2

Let's clarify some things. Companies allow for the public to purchase their shares through Initial Public Offering (IPO) (first-time) and Seasoned Public Offering (SPO) (all other times). They choose however many shares they want to issue depending on the amount of capital they want to raise. What this means is that the current owners give up some ownership % in exchange for cash (usually). In the course of IPOs and SPOs, it can happen that the public will not buy all shares if there is very little interest, but I would assume that the more probable scenario if very little interest is present is that the shares' value would take a big drop on their issuance date from the proposed IPO/SPO price.

After those shares are bought by the public, they are traded on Exchanges which are a secondary and (mostly) do not affect the underlying company. The shares are exchanged from John Doe to Jane Doe as John Doe believes the market value for those shares will take a direction that Jane Doe believes in the opposite.

Generally speaking, markets will find an equilibrium price where you can reasonably easily buy-sell securities as the price is not too far from what most participants in the market believe it should be. In cases where all participants agree on the direction (most often in case of a crash) it can be hard to find a party to make a trade with. Say a company just announced negative news with long-lasting effects on the business there will be a surge in sell orders with very few buyers. If you are willing to buy, you will likely very easily find a trading partner but if you are trying to sell instead then you will have to compete for the lowest price against all other sellers.

All that to say that in such cases, while shares are technically sellable / purchasable, the end result can be that no shares are purchasable.

Answer 3

RonJohn is right, all shares are owned by someone. Depending on the company, they can be closely held so that nobody wants to sell at a given time. This can cause the price people are offering to rise until someone sells. That trade will cause an adjustment in the ticker price of that stock. Supply and demand at work. Berkshire Hathaway is an example of this. The number of shares is low, the demand for them is high, the price per share is high.

Answer 4

Yes, all the shares of a publicly traded company can be purchased. This effectively takes the company private so that it's no longer traded on a stock market.

Here are some examples:

• Alliance Boots plc
• Dell Computers
• Equity Office Properties
• Burger King
• H.J. Heinz
• Panera Bread
• Hilton Worldwide Holdings

EDIT: to answer your edited question... the corporation can issue more stock. However that would dilute the value of existing shares. Thus, existing shareholders must vote to allow more shares to be issued. So... in your situation yes, you'd need to wait for someone else to sell.

Answer 5

Stock trades are always between real buyers and real sellers. In thinly-traded small stocks, for example, you may not always be able to find a buyer when you want to sell.

For most public companies, there is enough volume that individual investors can just about always fill their market orders.

Answer 6

If the share is listed on a stock exchange that creates liquidity and orderly sales with specialist market makers, such as the NYSE, there will always be a counterparty to trade with, though they will let the price rise or fall to meet other open interest. On other exchanges, or in closely held or private equity scenarios, this is not necessarily the case (NASDAQ has market maker firms that maintain the bid-ask spread and can do the same thing with their own inventory as the specialists, but are not required to by the brokerage rules as the NYSE brokers are). The NYSE has listing requirements of at least 1.1 million shares, so there will not be a case with only 100 shares on this exchange.

Answer 7

Everyone has a price. If nobody is selling shares, then increase the price you will buy them for.

And then wait. Somebody will have some hospital bills to pay for eventually. I buy illiquid investments all the time, and thats typically what happens.

Great companies do not have liquidity problems.